Rodney Hide is a member of ACT, a party of the 1%. Not only does this reflect the party’s support in the polls but it also reflects who the party supports. He is a former botanist who comments occasionally on economic issues. I think he should stick to botany.
In the Herald this morning he makes an extraordinary claim that if we tax multinationals properly they will pack up their bags and leave New Zealand. Putting to one side questions of why they are not already being paying their fair share this suggests that they are motivated by a doctrinal insistence of starving the state of resources at all costs rather than making a profit.
He insults the intelligence of ordinary kiwis by stating that they do not know how much tax they are paying. Funny that. Pretty well everyone I know is well aware of their gross pay.
He then makes the bizarre claim that a company tax is nothing more and nothing less than a withholding tax to make sure the shareholders pay their share implying that shareholders do pay their share.
This ignores the creative accounting used by the likes of Compass whereby things such as transfer payments and “loans” that are not are used to make sure that little if any local profit is made and tax is paid. Even if a foreign shareholder was obliged to pay tax of a multinational’s local profits there is none so no tax is paid. Instead the transfer pricing or loans makes sure that the profit is earned in a jurisdiction where the tax is minimised.
Along with the use of foreign trusts this particular technique is responsible for much of the transfer of wealth to the 1% that has occurred over the past couple of decades. Hide’s failure to mention it suggests that at best he has no idea what he is talking about.
His article reaches a crescendo of stupidity with this passage:
The more our Government taxes [multinationals] the less they will invest and do business in New Zealand.
The only losers are New Zealanders.
Imagine how much investment there would be if their returns were taxed entirely away. Who would be the losers? The multinationals? Or Kiwis?
The demand for multinationals to pay more tax is stupid and counterproductive.
But it’s not going to end. The illusion and deception are here to stay – and the fiction is certainly one that our politicians are anxious to perpetuate.
I am not aware of any proposal to tax a multinational 100% of their profit. Holy false equivalence.
Admittedly some are that stupid and that opposed to paying their fair share of tax that they will make irrational business decisions just so that they can avoid contributing to the cost of running a country. But most realise that it is crazy to turn down a perfectly good business proposal because of some inbuilt resistance to sharing the love around by paying some tax on the profit they earn.
The article reminded me of something that George Monbiot wrote a few years ago when the then UK Government proposed to increase corporate taxes.
It’s a bitter blow. When the government proposed a windfall tax on bonuses and a 50p top rate of income tax, thousands of bankers and corporate executives promised to leave the country and move to Switzerland. Now we discover that the policy has failed: the number of financiers applying for a Swiss work permit fell by 7% last year. The government must try harder to rid this country of its antisocial elements.”
If there is a profit to be made you can pretty well guarantee that a multinational will continue to sell its goods in the country. Even if it has to contribute to the cost of roads, schools, education and social welfare that makes sure that local kiwis can continue to access and afford to buy their goods and services.
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